Tuesday, June 29, 2010

A Moment of Honesty: Caught In One's Own Web

The current president of the US is generally caught up in his own sense of destiny. But now and then bits and pieces of reality slip through the cracking facade. And despite the best efforts of a massive news media that adores and covers for him, a massive pseudointelligentsia in academia and professional punditry hungry for radical change, tax supported public sector unions willing to use the fist and club to protect his standing, and a leftist base still living in a fantasyland of wish fulfillment -- the US economy is crumbling beneath the bloating Obama-ocracy.

What else can the economy do? Obama has crushed private investors, private entrepreneurs, small business -- all the usual sources for new job growth and the expansion of wealth in a healthy private sector. No one in the Obama administration understands the private sector and its vital role in a healthy economy. Too, too bad.

I am sick of Keynesian clowns who do not know the cart from the horse, who think debt is a free lunch, who think spending and debt are the ways to get out of debt problems and most of all never say how this debt is going to get paid back.

What causes depressions is an unsustainable runup in credit and debt that precedes it, NOT a failure to go deeper in debt.

Anyone who understands 5th grade math should be able to figure that out. Unfortunately, Nobel prize winning economists can't. _Mish

Structural problems are immense and the sad fact of the matter is those problems cannot be cured by more deficit spending. Krugman is correct about a depression, just wrong about the cure. Logically the disease and the cure cannot be the same.
_Mish

"There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved." - Ludwig von Mises

...Congress and the Fed added to the misery by wasting trillions of taxpayer dollars bailing out banks and Wall Street while leaving the private sector in shambles, and millions of homeowners debt slaves to their houses.

Each time the day of reckoning is put off, the bigger the price down the road. Thus, we should all be fearing more Keynesian and Monetarist attempts to forestall the inevitable collapse.

Attempting to stave off further debt writedowns and another recession is like attempting to stave off a hangover by drinking more whiskey.

Yes there will be short term pain and lots of it to do the right thing now, but there will be greater pain down the road if we don't. _Mish

Americans elected this clown and his troupe. They are going to have to pay an immense price before they are finally rid of him.